The conference was convened on 20 September 2019 by Bim Afolami MP, with about 200 participants. They included half a dozen or so from the Extinction Rebellion (XR), with whom I had lively conversations about universal carbon rationing, the closure of national air spaces to jet aircraft, the creation of a high and stable price for carbon by non-market means (e.g. commitment to buy certified conserved carbon at a fixed price in the distant future), the supremacy of ecological over human laws, and the need for good leaders to explain the truth effectively. There were also a score or so of school children, who were there to learn about the issues driving the global School Strike for Climate[1]. In solidarity with the latter, I had with me an icon of Greta Thunberg, beautifully painted by my niece Florence.
The conference was opened by Bim Afolami, who welcomed the students, mentioned the School Strike, and stressed that the conference was to provide bottom-up thinking with which to inform Parliament. The first presentation was by Baroness Brown, Vice-Chair of the Climate Change Committee. She noted that the issue for the CCC – in line with international agreements – was with ‘territorial emissions’ (those internal to the country, so its own responsibility), not ‘consumption emissions’ (those imported as embedded carbon in goods produced elsewhere, so someone else’s responsibility). Considering only territorial emissions, then, the UK reduced its total from 800 MtCO2e in 1990 to 500 MtCO2e in 2016, almost entirely through measures of which the electorate were virtually unaware (i.e. decarbonisation of power supply, mainly from wind and phasing out coal). The 2008 goal of an 80% reduction in emissions by 2050 was initially thought to cost 1-2% of GDP, but renewables have become cheaper so the 2019 goal of zero emissions by 2050 is still estimated to cost 1-2% of GDP, but it may be less and will include large but unquantified benefits from clean growth, health and environment. For comparison, the banking crisis that began in 2008 is thought to have cost about 10% of GDP.
To bring UK emissions to zero will require[2]: a 2-4 fold increase in the size of the electricity sector (because of the need to electrify so many things, such as domestic heating and surface transport, and for hydrogen production); increased offshore wind from 10 to 75 GW/year; increased hydrogen production from 27 to 350 TWh/year; increased carbon capture and storage from zero to 180 MtCO2e/year All these can be done without the public much noticing, but also needed will be: forest planting increased from 10 to 50 thousand hectares (requiring land use changes); insulation and renewable heating for 29 million homes (requiring domestic investment); zero registration of new fossil-fuel powered vehicles; up to a 25% reduction in flying; and changes in employment and skills. These require a mixture of societal and technical changes, and the development of what Greta Thunberg has called ‘cathedral thinking’.[3]
The keynote address was by Ben Caldecott, who was introduced by Bim Afolami as founder-director of the Sustainable Finance Programme of Oxford University, formerly of the Green Alliance and Climate Change Capital, and as one “who has been praised by so many diverse newspapers that he has a public profile that any politician would die for”. Ben said that his talk and his institution’s research programme was about stranded assets and their implications: the two-way relationship between investors and society, including environment-related risks that create stranded assets, and the role of the Bank of England. He began by observing that Joseph Schumpeter had introduced the idea of ‘creative destruction’ as a feature of capitalist economic systems[4], and that Carlota Perez had described the shifting of techno-economic paradigms (TEPs)[5]. Ben argued that the drivers of the current TEP shift may be more powerful than any yet seen, simultaneously involving huge physical climate impacts, deep technological changes, new resource landscapes, unprecedented litigation and liability exposures, and quickly-evolving social norms (e.g. climate strikes, divestment campaigns, hostility to single-use plastics, veganism) that will produce new policies, laws, judicial decisions and employment requirements.
He observed that many of the risks are non-linear and there is a scarcity of backward-looking data with which to appreciate them. Moreover, risk exposures are systemic and permeate the entire economic and financial system – companies, asset managers, asset owners, and regulators. Hence more attention must be paid to all nature-related risks: not just climate, but biodiversity[6] too. In every future scenario there is a lot of risk and many stranded assets, with a range based on global mean temperature rise and the extent, focus and intensity of human responses, and the numbers involved are “scarily big” (e.g. 30-80 trillion dollars of stranded assets for a two degree temperature rise, larger for a 1.5 degree cap as agreed at Paris). All of this had been predicted in the 1980s by Florentin Krause, Wilfrid Bach and Jon Koomey[7].
Ben said that he “tends towards the pessimistic end of the spectrum of options”, and explained a number of constraints on the necessary investments. Optimism bias concerns energy forecasts versus reality. Here the number of years before a ‘tipping point’ at which 100% of energy investment goes into renewables (i.e. when fossil fuels become a sunset industry attracting no investment, and its decline will accelerate) is realistically four years away now, but Exxon-Mobil still assumes 50 years and BP 31 years. Short-termism, the fallacy of sunk costs, and loss aversion together discourage accurate accounting of stranded assets and irrational commitment to vulnerable asset holdings and investments. He then turned to sovereign actors, which are involved because they own assets or enterprises, possess sovereign wealth funds, are vulnerable to the macroeconomic and fiscal implications of changing asset and product values (especially commodity exports), and are affected by the political economy frictions arising from stranded assets (e.g. mass unemployment).
He answered the ‘so what?’ question by saying that stranded assets are relevant to investment, financial stability, corporate strategy, and the issue of ‘just transition’ (i.e. managing the negative impacts on society). He summarised the thinking of the Bank of England as a key central bank and financial supervisor, starting with Sir Mervyn King’s correspondence in 2011-2012, the appointment of task forces in 2015, staff working papers in 2016, establishment of the Network for Greening the Financial System in 2017, key studies in 2018, and culminating in the Prudential Regulation Authority (PRA) Supervisory Statement to take effect 15 October 2019. This requires, for example, all banking and insurance businesses to appoint people who are responsible and liable for climate risk, to allocate sufficient resources to deal with climate risk, to report transparently and accountably on the management of climate risk, and to provide evidence of compliance. The policy implications are profound. The UK Climate Transition Impacts Assessment provides good and consistent data to support decisions. To overcome loss aversion, much more powerful policy signals are needed. But we need to look beyond disclosure at more active ways to scale up investment in climate resilience. As Ben concluded: “If ever there was an area where it would make sense to take money from the future and spend it now, this is it!”
- Q1: Has the price of asset stranding been built into pricing? A1: No, because of short-termism and perverse incentives.
- Q2: Are pensions involved? A2: This is a big problem. 20-25% of all dividend payments in the UK are from BP and Shell.
- Q3: How to prioritise risks? A3: On the physical risk side: mitigate, adapt, consider the Global Warming Index, which shows that a 1.7 degree rise has already been ‘baked’ into the system. The sooner you change the easier it is to minimise commitments to bad things. Lots of asset stranding will occur, inevitably.
- Q4: Impact of PRA intervention? A4: This only applies to bankers and insurers; less stringent arrangements apply to pensions, and more work is needed there.
- Q5: Nuclear? A5: There are no solutions to correct a terrible mistake like Hinkley C.
- Q6: How pessimistic are you? A6: “I’m a technology optimist, but I don’t think we’ll do enough or work out well enough how to ‘come back down’ [to sustainable levels]. Climate impacts are greater than we thought they would be. There is a policy response, driven by climate strikes, XR, etc., but how much impact are these having in China, India, Brazil? The UK government is doing quite a good job, but other jurisdictions are a real problem.”
Three other speakers followed in ten-minute slots. On energy strategy, Dan Meredith (E.on) said that E.on has been selling off its fossil fuel power stations (“E.on’s job is to make money for its shareholders, so this was a huge gamble”). The energy flow chart for the UK is complex, but right now 36% of power in the national electricity grid is zero carbon. The total energy picture is very different, however, and renewables are tiny relative to gas and petroleum. Energy efficiency is key, but constrained by the very poor quality of UK housing. A just transition is vital, and here the distribution of costs is important. Simply putting the costs on energy bills unfairly impacts the poor (and putting decarbonisation costs only on electricity bills creates a perverse incentive), so general progressive taxation is better. The most economically efficient thing is a high and stable carbon price, but the poor must be protected politically. In any case a whole suite of policies must be used, on a spectrum from more market-based (research & development, subsidies, quotas, trading schemes) to more interventionist (taxation, mandatory phase-outs). There are no ‘silver bullets’ and all policy levers must be used. The reason why the UK has been able to make the progress that it has is due to a cross-party policy consensus that has been sustained for 30 years (1989-2019) – a rare and precious phenomenon.
On ecology strategy, James Bell (Rothamsted) described phenological changes in the UK (i.e. the timing of flowering, fruiting, leafing, insect dispersal, etc.) and noted that food webs are starting to fall apart because of growing trophic mismatches between supply (e.g. of seeds, insects, nectar, young leaves) and demand (e.g. baby birds). There are many other consequences as well, such as wet fields affecting farming activities. Mitigating these changes will require more attention to domestic water collection, meal-worms in garden bird feeders, and drought-resistant crops, as well as active international campaigning, especially at next year’s UNFCCC CoP 26 in Glasgow and during the UNGA-declared UN Decade of Ecosystem Restoration (2021-2030), and participating in the IPCC. He mentioned peatland [necromass] as storing more carbon than all vegetation [biomass] in the world combined, and described the decay and burning of Arctic peatlands as a “positive feedback of nightmare proportions”. Hence there should be protection of forests such as the 67 hectare Heartwood Forest, home composting, asking Parliament to restrict the use of peat-based compost, and research on composting. His final point was that only Morocco is currently on track to comply with all UNFCCC Paris milestones on the 1.5 degree pathway.
On economic strategy, Bim Afolami (MP) observed that in political terms the question is: “how are we going to pay for this stuff?” He noted that the Treasury relies on weak models that misrepresent the costs and benefits of transition. But he expressed optimism over the role of the private sector and green finance, and the potential of the City of London to bring the world together and to facilitate correction of activities in recalcitrant jurisdictions. He observed that some things should be taxed more and others less, that private investors need incentives to be rearranged, and that green finance can be used to bring down the costs of investments in capital-intensive changes (e.g. home insulation). Asked (by XR St Albans) whether he thought that zero carbon by 2050 was immediate enough, he said that “we’ll have to be bolder than we are being even to reach the 2050 target, and there’s no point in declaring an earlier goal until we know that we can reach the current one.”
After magnificent overviews by Baroness Brown and Ben Caldecott, amplified by the other speakers, it seemed clear that the task of the ecology breakout group was to consider how ecology[8] could develop the ecological rules by which government must be guided and held to account. There were some 30 participants in the main auditorium before a panel chaired by James Bell (entomologist, Rothamsted) and flanked by Jo Judge (National Biodiversity Network Trust), Alain Jones (? Environment Agency), Lesley Jones (Hertfordshire Wildlife Trusts) and John Pritchard (River Ver conservation group). Dr Bell said that the aim was to produce three outputs for Bim Afolami to take back to Parliament: a short-term policy aim for national government; a long-term policy aim for national government; and some local priorities.
I thought that the focus should be on how to build ecological principles into governance and a national society that survives the current emergency to live at peace with nature. I therefore proposed the short-term aim of following Scotland in establishing a national Citizens’ Assembly, with an open mandate to consider the future of English social and ecological systems, and the long-term aim of putting its conclusions into effect. (Local priorities would build on declaring climate and ecological emergencies and early zero emission and biodiversity-loss goals, and starting the consultation, participation, planning, regulation and investment processes needed to achieve those goals, including local and regional Citizens Assemblies to guide and support decisions.) In an effort to broaden the group’s attention beyond limiting methane emissions from livestock, I also observed that the most important methane issue was to do with the trillions of tCO2e likely to be released by the melting Arctic in the 2030s, which pose a truly existential threat to the fabric of the biosphere[9].
The chair responded that these were “very good points, but concrete proposals are needed”. He then guided the meeting back to topics that had been dominating the discussion, specifically the need: for more ecologists to be employed by local government; for more public education on biodiversity; for climate-resistant gardening and bird-feeding; for domestic water conservation; for economic resource valuations to include natural systems and inform government planning; for new buildings to have higher standards for energy and water conservation; for joined-up government thinking; for consumer preferences to incentivise farmers to manage land better; for promoting plant-based diets; for more effective recycling of wastes; for roadside verges to be used as wildlife refuges; and for local councils to compost their own green wastes rather than using peat.
These are all perfectly reasonable proposals, of course, but in my view either too generic or too specific to target the strategic challenges posed by the climate and ecological emergency. In any case, there remained six minutes for the chair to distil advice for Parliament, and his final remarks were that short-term objectives would include better regulations for new buildings and the employment of more local government ecologists; local priorities were to focus on composting, less use of peat, and road-side verges; and no long-term objective was specified.
I had to leave the conference then, with the feeling that an opportunity for ecological systems perspectives to influence the strategic agenda had been lost. I think it should have been remembered by the organisers: (a) that ecology is the only science that deals with complex living systems at all interconnected scales, including all parts of a planetary ecosystem that is now in total crisis; and (b) that science-based ecological thinking is the key to both understanding and resolving the climate and ecological emergency. From this point of view, the ‘ecology’ part of the conference was an alarming disappointment.
© Julian Caldecott (Schumacher Institute for Sustainable Systems)
Notes
[1] Climate Strike: www.theguardian.com/environment/2019/sep/21/across-the-globe-millions-join-biggest-climate-protest-ever
[2] UK climate progress and priorities: www.theguardian.com/commentisfree/2019/sep/20/the-guardian-view-on-transport-emissions-the-trouble-with-planes-and-automobiles
[3] Cathedral Thinking: No One is Too Small to Make a Difference by Greta Thunberg, Penguin, London, 2019:45-54.
[4] Creative destruction: Capitalism, Socialism and Democracy, Harper & Brothers, New York, 1942.
[5] Techno-economic paradigm shifts: Microelectronics, Long Waves and World Structural Change: New Perspectives for Developing Countries’, World Development, 13:441-463, 1985.
[6] Biodiversity. The variety and variation among all kinds of life, or the information that has accumulated in living systems, including the genetic coding for proteins, metabolic pathways, cells and individual organisms, the differences among lineages and species, and the relationships and processes in every ecosystem.
[7] Risks of transition: From Warming Fate to Warming Limit: benchmarks for a global climate convention, International Project for Sustainable Energy Paths, 1989.
[8] Ecology. (1) The science of living systems, including our own selves, families, communities, farms and dwellings, as well as the atmosphere, oceans, coasts, swamps, grasslands, soils, drylands and forests and all their non-human inhabitants, which make up the living world and every part of it. The systems approach requires an ecologist to consider all potential connections between systems, and to think in terms of every system being part of a bigger one, from the molecular to the global level, and with the characteristics of every level both influenced by and influencing every other level. (2) The study of how organisms live together, meet their needs for energy and nutrients, and respond to their environment. As a science, it relies on the use of common standards of observation, analysis and collective criticism to build up reliable descriptions and explanations of reality; and as biology, it assumes the engineering of organisms through evolutionary responses to design challenges imposed and opportunities offered by the real world.
[9] Biosphere. (1) All parts of the Earth where life occurs, comprising the atmosphere, all oceans, fresh waters, soils and land surfaces, and their underlying sediments and shallow rock layers. The total depth of the biosphere is about 30 km, from high altitude to depths underground that are too hot for organisms to survive. (2) The planetary ecosystem and its emergent properties, comprising all lesser ecosystems and all their connections, and sometimes called Gaia.
